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Thursday, November 19, 2015

The Golden Years Gap

Flo, the Progressive insurance pitch woman in the white uniform
and headband, is relentlessly perky. She won’t be when she learns about the
double standard that lets her CEO sock away millions more for retirement than
she can.

Whereas the Flos of the working world face strict limits on how
much they can set aside tax-free for their golden years, many of their bosses
don’t.

Flo’s boss, Progressive CEO Glenn Renwick, dropped $26,170,569
last year into his deferred compensation account — that’s $26,152,569 more than
Flo would’ve been allowed to invest in a 401(k).

Ordinary workers under 50 (like Flo) can contribute no more than
$18,000 per year to a 401(k). But most big companies offer special accounts
that allow their top brass to set aside unlimited amounts of their pay tax-free
until they retire.

Renwick’s stockpiled more than $150 million in such an account
during his more than two decades at the company. That’s enough to generate an
$850,000 check every month for the rest of his life.

This double standard is just one reason the CEO-worker
retirement gap is now even wider than the income divide.

A new report I co-authored for the Institute for Policy
Studies and the Center for Effective Government finds that the company
retirement assets of just 100 CEOs equals the combined golden years
savings of 50 million American families — or 41 percent of us.

On top of their special tax-deferred accounts, more than half of
Fortune 500 chief executives get traditional pensions that guarantee a stable
monthly payment after retirement. That kind of security has gone the way of the
typewriter for most American workers.

To cut costs, most companies have shifted to riskier and less
generous 401(k)-type plans — or eliminated retirement benefits altogether. As a
result, more and more seniors have to rely on Social Security to avoid falling
into poverty.

In response, Senator Elizabeth Warren has introduced a bill that would offer a one-year, 3.9 percent bump in
Social Security benefits. How would the Massachusetts Democrat pay for it? By
eliminating a tax loophole that currently subsidizes excessive CEO pay.

There are many other ways to narrow the retirement divide so
that all Americans can look forward to living in dignity in their later years.
For one thing, corporate executives should be subject to the same rules that
govern the retirement assets of the people they employ.

If Flo the perky pitch woman can’t put more than $18,000 per
year in a tax-deferred account at Progressive, her boss shouldn’t either.

Thought for the day

You’d be forgiven if you hadn’t noticed. His verbal bombshells are louder than ever, but Donald J Trump is no longer president of the United States. By having no constructive response to any of the monumental crises now convulsing America, Trump has abdicated his office. He is not governing. He’s golfing, watching cable TV and tweeting…

In reality, Donald Trump doesn’t run the government of the United States. He doesn’t manage anything. He doesn’t organize anyone. He doesn’t administer or oversee or supervise. He doesn’t read memos. He hates meetings. He has no patience for briefings. His White House is in perpetual chaos.

Robert Reich

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